Levendary Cafe was appointed with a new CEO in January 2011. Mia Foster is a first time CEO with no international management experience, faced with a major challenge at Levendary Cafe, a $10billion US-based fast chain. However, the Levendary Cafe already established in China market while departing CEO Howard Leventhal in the position. Strategically, many of the corporate staff have become concerned that the company’s major expansion into China is moving too far from Levendary’swell defined concepts of store design and menu. Besides that, Mia Foster is also found that Chinese subsidiary submitted all management and financial reports to Denver or likely known as headquarters of Levendary Cafe in its own format. Louis Chen is the president of Levendary China. He is capable of speak Mandarin Chinese and English and had long experience as retail property developer gave him intimate familiarity with neighborhoods in Shanghai and Beijing. Chen also had a network of contacts to help speed up the process of permitting, incorporating, and staffing stores.
However, in order to overcome these challenges, Mia Foster had her first video conference meeting with Louis Chen. Since, Mia Foster is not satisfied with financial report format, she urged Louis Chen to make a change. Meanwhile, financial evidence shows that Chen’s efforts have produced strong results and suggests that he knows China far better than U.S headquarters does. Mia Foster wants to protect the integrity of reporting structure. Organizationally, Foster has been frustrated by the apparent unwillingness of Louis Chen to confirm to the company’s planning and reporting processes. Therefore, Chief Franchise officer Peter was flies to China conduct a comprehensive review on the 23 Levendary Cafe in the market. Hence he submitted the detailed description on the 23 Levendary Cafes in China to Mia Foster.
Based on the detailed description submitted to the CEO, She found that several Levendary’s Cafe concept of store design and menu was customized without any standardized. Thus, Mia Foster had a second video conference meeting with Louis Chen. During the meeting, Chen response angrily to Foster, he was work hard to begin from zero until 23 Levendary Cafe today and explained the necessitates of differentiation and customization in the foreign market as well. Finally, Foster is aware of the difficulties of localizing a chain restaurant concept in foreign market. As a result, Foster decided flies to China to meet with Chen personally and to make a decision that will determine the future of Levendary China.
When Levendary entered China, they gave Chen the full control over the operations there, although a well-developed detailed plan and a clear tactic of how to implement this plan is a must. However it is clearly this is not the case whereas everything had been handed to Chen from A to Z. The chain of Levendary Café in USA are run by a strict set of rules and allowing modifications only after approval from the concept group regarding the “look and feel” of the firm. The Levendary Café in China is following a business model which is completely different from that of the US operation model. Chen wanted this café to adapt to the changing tastes of people from place to…
Observing the various critical situations mentioned above, the following are the various problems that are to be dealt. The first problem will be the differences in accounting techniques used by China and US. This is a major problem for the HQ of Levendary Café because as it being a listed company it should be as transparent and uniform as possible while preparing its income statements which will be the translated into annual reports and they will be the face of the company in the public. So, translating the income reports from China into reports according to the GAAP principles used in USA is both time taking and increasing the costs.
Furthermore, the outlet design standards and menu selection in China are different with US. There are non- standardized operations in China with US. The Levendary Café in China is following a business model which is completely different from that of the US operation model. Chen wanted this café to adapt to the changing tastes of people from place to place. Chen setting up stores according to the local needs rather than following the standardized model adapted by US outlets. He also tried to modify the “look and feel” of the café according to the locality in which it is operating.
For example, the branch at Shanghai’s historic Yu Garden area provided a takeaway counter with no seating and the branch at North entrance to Beijing’s Forbidden City, replaced classic wooden framed upholstered chairs with aplastic framed alternative besides no salads on its menu which salad is a must on US menu. While the branch at Shanghai, all but one sandwich item had been removed from the menu & replaced by a variety of local.
Chen was modifying Levendary’s signature menu items, outlet design standards and the overall café environments without consulting U.S. management. Hence, newly appointed Levendary CEO Mia Foster was faced with a number of pressing matters ranging from how to link Chen and his management team to those in corporate headquarters, to the standardization of future Levendary Café locations.
Decision Analysis &Solutions
Concluded of the case study, Levendary Café has taught the person who reads particularly business player to concern and obey headquarter, yet disremembering the subordinate within doing business. Even somehow headquarter is not the centre of the truth without doing any respectable communication with the subordinate. The Levendary Café’s main person is Mia Foster, as a CEO and Louis Chen, an employee who runs and in charge of the Levendary business in China.
By this case, Chen must be obviously maintain the communication and the concern of Levendary China situation to the Headquarter. The situation of Lavendary China must be monitored by consensus and Chinese Operation market. Mia Foster as a CEO, she might more understand the needs of Headquarter and Levendary China market. The operation of the Levendary China will follow the requirements and report by Louis Chen.
Generally, the Levendary headquarter must be extra concern about the up-to-date and current issues of the subsidiary office. By the case study, the Levendary China is struggling into the market and competition, how to settle the business in China as well as trying hard to keep an eye on certain rule and regulations of headquarter, essentially those were not be working.
Technically, the barrier was facing in Levendary China is about localized the market segmentation. The Levendary China must build the solid and tough team through leading by Chen. Actually, Louis Chen had brilliant idea to draw the excessive concept for Levendary China and would work out with that idea. The only things that Chen needs are reasonable endorsement from Mia Foster and headquarter.
Courtney from Study Moose
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